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The RBA’s latest rate increase has been passed on by the major lenders, presenting more challenges for brokers and their clients.
The Reserve Bank of Australia (RBA) increased interest rates to 4.35 per cent in its November monetary policy meeting, prompting Australia’s major banks to follow suit and pass on the hike to customers.
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Speaking to The Adviser, founder and chief executive of Mortgage Navigators, George Massouridis, said the increased rates will hit newer clients more than existing ones.
“We have a lot of clientele that have just gotten pre-approvals that have been put in the pipeline through brokers or lenders, and now these pre-approvals are going to have to get revisited because their capacity’s changed,” Mr Massouridis said.
Mr Massouridis added that his business has been “proactively” and “aggressively” contacting lenders days before a rate decision to reprice rates for their clients.
“We do that in anticipation of what the RBA [decides],” Mr Massouridis said.
“We go in three or four days before the RBA meets, contacting all our lenders in bulk and get those lenders to reprice for our clients.
“Brokers should be doing that aggressively, especially over the last 13–15 months. It’s a good tactic that creates conversations with the client.”
Mortgage broker Andrew Wheatley at Wheatley Finance said that brokers need to “become experts” in understanding the reduced serviceability buffer policies from various banks.
“The current offerings mostly apply to refinance, however different levels of cashout apply, some allow investment interest-only, while others don’t require new payments to be lower than current,” Mr Wheatley said.
“It’s important to understand all of them as that is the solution required to assist many borrowers out of mortgage jail.
“The current environment is showing how vital brokers are in assisting Australians to explore more options and make better decisions about the biggest expense they have and these policies are a vital part of the brokers’ toolbox in 2023.”
Finance specialist and broker at Key Choice Lending, Matthew Clark, said the increasing rates will “pose challenges for borrowers” especially in regard to budgeting and understanding borrowing capacity.
“The uncertainty of ‘what if’ scenarios, where rates continue to rise, can create anxiety among borrowers,” Mr Clark said.
“Clients aren’t the only ones who can be challenged by rising interest rates; brokers’ volumes are down, and much of the work done during these times is unpaid.
“From a broker’s business perspective, it’s crucial to highlight that it’s challenging to see how best interests duty and clawback can coexist without brokers losing out. Many in the industry believe that abolishing clawbacks is necessary to maintain a fair and sustainable business environment.”
New interest rates
Variable rates across ANZ’s, NAB’s, Westpac’s and Commonwealth Bank of Australia’s (CBA) home loan products and savings rates will increase by 0.25 per cent per annum (p.a.).
The lifted rates for ANZ, NAB and CBA customers will come into effect as of 17 November 2023, while Westpac’s rates will increase for new and existing customers as of 21 November 2023.
ANZ customers will see monthly repayments increase by $70 on a variable home loan of $450,000 for an owner-occupier paying principal and interest.
Meanwhile, non-major banks Macquarie Bank and Bank of Queensland (BOQ) have also announced an increase of 0.25 per cent to their variable home loan rates, effective from 17 November and 10 November 2023, respectively.
Additionally, AMP Bank has announced that variable home loan interest rates will increase by 0.25 per cent p.a. effective 10 November 2023 for new customers and 13 November 2023 for existing customers.
ING has also increased all variable home loan rates for new and existing customers by 0.25 per cent p.a. effective from 14 November 2023.
[RELATED: Rate hike does not 'make sense']
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